In the first year of your business’ life, the success of a small company hinges on lowering its overhead expenses which can make all the difference between insolvency and survival. To ensure that your business stays as financially lean as possible, take the following six tips into account when creating and establishing your company budget.
Cut Your Staffing Costs
Make sure that you retain the smallest staffing commitment needed to deliver on your business model. Taking on full-time staff is a serious financial and managerial decision, and commits you to paying salary even in periods when cash flow is poor. And while you can get away without paying yourself for a month, it is illegal to withhold salary from your staff. Consider employing temp workers at first, to provide your business with more flexibility. Finding skilled and enthusiastic interns can be even better, as you can provide valuable work experience in return for their efforts.
Reduce Your Office Overheads
Some businesses need to hire some space in order to store inventory or house equipment. Offering telecommuting options with your staff is worth considering as well. Reducing the amount of money that is spent on office space can create significant savings and improve morale within the business by allowing the staff to work from home and avoid a stressful or long commute. Some of the most reputable companies in the world, such as Sears and Citibank, now operate largely on telecommuting, and there is no reason that a small business should not follow suit.
Track Your Finances
It’s very difficult to reduce your overhead costs if you don’t know what you are spending your money on and when you’re spending it. Choosing to work with an accountant not only enables you to maximize your tax savings and reduce the amount of money you pay out to the government, but can also ensure that you keep better track of your spending throughout the rest of the year. A good financial professional will also help you to forecast any potential cash flow blockages or investment opportunities, which will allow you to spend your existing income more effectively.
Reduce Every Bill
Given the competitive nature of today’s utilities market; there is no excuse for sticking to a deal which doesn’t deliver the best saving for your business. With many suppliers offering incentives to switch services and the advent of price comparison websites, analyzing your current situation and making the switch to increase your savings is a smart move. You should also investigate the possibility of investing in order to make long-term savings, for example going green with technology such as solar panelling, the excess energy from which can often be sold back to energy companies.
Price comparison websites are not the only way in which the rise of e-commerce has helped to reduce your business overheads. Sites like eBay can put you in touch with excellent deals on second-hand or even brand new products, resulting in huge savings when compared to buying at wholesalers.
Don’t Forget Government Support!
As well as reducing your overheads, it would be smart to keep up to date with the support provided by both central and local government for startup businesses. With the economic recovery being driven largely by the small business sector, politicians are keen to encourage new companies, and you may be able to secure financial help for your activities.
Daniel N. is a UK blogger who writes on a wide variety of topics including business and marketing. He is currently working on behalf of Rajapack.